February 26, 2017
Written by Rejaul Hasan, Ph.D. Candidate, 2018, College of Textiles and BSC Associate
What is the state of the Bangladesh apparel industry three years after the deadly incident at Rana Plaza? What are the challenges and opportunities in building a safe and sustainable apparel industry? What is the roadmap to achieve the targeted $50B apparel export by 2021? These are some of many discussions at the 3rd Annual International Conference on “Sustainable Models for the Bangladesh Apparel Industry" that I had the opportunity to attend on September 24, 2016 at Harvard Law School.
Major apparel industry stakeholders across the world participated in the conference including U.S. retailers, U.S. State Department, European Union, Bangladesh Government, Bangladesh garments business association, Bangladeshi manufacturers, US Embassy Bangladesh, World Bank, Netherland Ministry of Foreign Affairs, International Labor Organization, Solidarity Centre, Worker Rights Consortium, Cotton Incorporated, Better Buying, South Asia Water Advisory, Ethical Trading Initiative, Harvard Business School, and Penn State University.
After China, Bangladesh is the second largest exporter of apparel and textile, with exports of $28 billion last year. It directly employs 4 million workers, of which 80% are women; the industry is playing a vital role in the country’s huge economic development and women empowerment since early 80s. Though the incidents of ‘Rana Plaza’ and ‘Tazrin Fashion’ in 2012-13 attracted negative attention and showed how vulnerable Bangladesh is in terms of workplace safety and labor rights, the area is a desired sourcing destination for major apparel brands and retailers in U.S. and European Union (EU) according to McKinsey.
At the conference, Scott Nova from Worker Rights Consortium expressed his frustration and deep concern regarding the slow progress of factory safety improvement in Bangladesh identified through Accord and Alliances inspection post Rana Plaza. According to him, many safety issues have not been addressed and he suggested signatory actions to make brands and retailer be responsible for factory safety. Bangladesh garments manufacturing association leaders claimed that every year the price of product is going down with an increase in requirements for more advanced product design, quality and overall sustainability requirements from the brands and retailers. This is a major challenge for suppliers to improve factory safety as fast as expected. In support, Prof. Mark Anner from Penn State University showed how the US apparel import price declined in the last 20 years and the correlation between import price and the labor rights situation of exporting countries was high. Suppliers from Bangladesh also mentioned how Accord and Alliances are inspecting a huge number of factories and making corrective action plans to be addressed. They also mentioned the matter of labor wages increase and recent reinforced environmental initiatives by governments and manufacturers of Bangladesh.
Liana Foxvog, Director of Organizing and Communications of International Labor Rights Forum shared a study that shows prevalence of female workers harassed by co-workers or supervisors and ineffective monitoring systems by factory and labor unions in Bangladesh has been problematic. In 2010 to 2016 the Bangladesh Joint Directorate of Labor (JDL) approved 362 labor unions against 783 registration applications. Tim Ryan, Asia Regional Program Director from the Solidarity Center added and reinforced the necessity of labor unions in preserving labor rights.
During the Conference, Prof. Ross from Clark University mentioned the recent “Tempaco” factory fire in Bangladesh that caused the death of more than 30 workers. He supports the U.S. government decision of not assigning duty free access as a GSP facility for apparel exported to the US. He states that until Bangladesh ensures major improvements in factory safety, this GSP facility should not be assigned and the EU should also ban this duty free access.
Representative from retailers mentioned the increasing competition in retail and that the industry is struggling to survive. Consumer expectations for having highly fashionable apparel at the lowest prices, consumer lack of interest of paying high prices for sustainable product, challenges from competitors and increases in production cost in Asia has put the apparel retail industry in survival mode. Many brands and retailers have already modified their product to adjust for price competition but still struggle to stay competitive. However, a report in the Sourcing Journal on 8 Aug 2016 “Cheap Clothing Created Some of the World’s Richest People” mentioned how owners of major apparel brands and retailers became billionaires through the apparel business. The topic remains a matter of heated debate on who is making most of the money in the apparel supply chain: the consumers, the brands and retailers or the suppliers.
The ultimate question that arises - what is the standard price or minimum price of any product sustainably sourced from Bangladesh? Suppliers from Bangladesh also emphasize that having such standards would provide an industry wide benchmark. This could probably justify the claim whether brands and retailers are really paying lower prices to suppliers than necessary to ensure a safe work environment, fair wages and overall sustainability of the supply chain. At the same time, it is important to examine whether factory fires or compliance violation in Bangladesh are linked to price issues. Is it really that expensive to ensure a safe workplace? For instance, the Rana Plaza, Tazrin Fashion and recent Tempaco factory fire is apparently less linked to low prices as opposed to compliance with regulation, monitoring, a sustainability culture and off-course ethical sourcing practices of top brands and retailers.
During the conference, a study from World Bank ‘Stitches to Riches’ portrays why Bangladesh will continue to be the apparel manufacturing hub for international apparel brands and retailers despite violations of fundamental social and environmental sustainability norms such as labor harassments, workplace safety, fair wages and river pollution by waste water etc. Economist Yevgeniya Savchenko from World Bank demonstrated how apparel manufacturing is likely to shift gradually from China to other low cost countries due to increased manufacturing cost in China and clearly Bangladesh is ahead of any competitors in terms of apparel export business growth (8.11% growth last year, the highest in the world) primarily because of extremely competitive labor price and relaxed environmental regulations. So, the question is will Bangladesh continue to export the cheap cloth in the world market at the cost of worker lives and environmental damage? Or will the Bangladesh government and international brands and retailers build a socially and environmentally sustainable apparel industry for long term business sustainability?